China Invests in Region Rich in Oil, Coal and Also Strife

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More than half a century since China started pumping oil in its arid west, tensions continue to rise over inequality and ethnicity in Karamay, which is now one of the country’s wealthiest cities.Published OnDec. 20, 2014CreditImage by Gilles Sabrie for The New York Times

KARAMAY, China — In a desolate park on the city outskirts here, oil bubbling from the ground fills small pools next to a wooden walkway. By one pool is a statue of a bearded ethnic Uighur man sitting on a donkey, playing a lute.

The symbolism is telling. China is ramping up energy production here, turning the northwestern Xinjiang region into a national hub for oil, gas and coal, while the increasingly marginalized Uighur people are memorialized in what appears to be a bronze homage to a romantic past.

China is investing more than ever in the vast, resource-rich Xinjiang region with the aim of bolstering oil extraction and refining, coal production, power generation, and natural gas production and transport. That is happening despite soaring ethnic violence. In deserts once traversed by Silk Road camel caravans, sands are now crisscrossed with pipelines and high-voltage wires.

“Look at how much they’re drilling,” said Lu Weidong, the team leader of a half-dozen technicians in hard hats and oil-stained red coveralls working one recent morning on oil pumps in the desert here. “Hundreds of pumps are being built, and there are hundreds more behind those hills that you can’t see.”

The foundation of Xinjiang’s energy economy is oil. Xinjiang has an estimated 21 billion tons of oil reserves, a fifth of China’s total, and major new deposits are still being found. This month, a state-owned oil company announced its greatest discovery of the year here, a deposit estimated to have more than one billion tons of oil on the northwestern edge of the Dzungarian Basin, not far from Karamay’s fields. Xinjiang is expected to produce 35 million tons of crude oil by 2020, a 23 percent increase over 2012, according to the Ministry of Land Resources.

Xinjiang also has the country’s largest coal reserves, an estimated 40 percent of the national total, and the largest natural gas reserves. Those three components form an energy hat trick that China is capitalizing on to power its cities and industries.

The region will be designated one of China’s five “energy bases” in the next five-year economic plan, and its economy will be further bolstered by President Xi Jinping’s vision of a “New Silk Road,” an ambitious plan to rebuild the ancient trade route into a 21st-century network of transportation and trade across Xinjiang, Central Asia and Europe.

Government money is flooding in. In May, Beijing said that 53 state-owned enterprises — from energy to construction to technology companies — were investing $300 billion in 685 projects in Xinjiang. The State Council, China’s cabinet, announced in June that the Xinjiang government was investing $130 billion to build infrastructure such as roads, highways and railways.

The main state-owned electric utility, the State Grid Corporation of China, is investing $2.3 billion over the next year to build high-voltage lines, according to People’s Daily, the main party newspaper. Xinjiang will export electricity to more populated parts of China and perhaps to Central Asia.

“Xinjiang is where all the growth in oil, gas and coal is going to be coming from,” said Lin Boqiang, an energy scholar at Xiamen University and adviser at PetroChina, China’s biggest oil producer. “Second, all the imported resources from Central Asia, oil and gas, go through Xinjiang and then get distributed from there.”

Xinjiang produced 25 billion cubic meters of natural gas in 2012, and it aims to increase that to 44 billion cubic meters next year.

Pipelines already transport natural gas from Central Asia and Xinjiang to central and eastern China. A new pipeline from Western Siberia is expected to transport 30 billion cubic meters of gas per year through the Altai Mountains to central Xinjiang, where it would connect with domestic east-west pipelines.

Regional officials are also pushing for the creation of a new source of gas: processing coal to create synthetic gas, which could then be transported east.

A State Council energy plan released in June says Xinjiang will be one of four sites for pilot projects to convert coal to gas and gasoline. An experimental coal-to-gas plant is already operating in western Xinjiang, to the concern of environmentalists, who say the process emits a huge amount of planet-warming carbon dioxide.

At least 52 others across China are under construction or in the proposal stage, with nearly half in Xinjiang, according to a count in October by Greenpeace East Asia.

The plants will help Beijing provide energy for populated parts of eastern China while moving the pollution-generating sources to the less populated west. More coal gasification would produce heavier smog in Xinjiang and also a surge in carbon dioxide emissions.

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A statue of a Uighur above a pond filled with oil in Karamay. Uighurs make up a minority of residents in the Xinjiang region, but are seldom hired by oil companies.CreditGilles Sabrie for The New York Times

Mr. Lin, the energy scholar, said a worsening of the environment in Xinjiang “just can’t be avoided.” He said he was not a supporter of coal gasification or coal-to-petrol projects for a different reason — the amount of water the processes require. Like most of northern China, Xinjiang suffers from an acute water shortage.

Pollution is only one consequence of resource exploitation for the region’s residents, a plurality of whom are Uighurs, a largely Muslim, Turkic-speaking population. The region’s energy wealth flows mainly to the state-owned oil companies in Beijing and to the Communist Party, dominated by ethnic Han. Last year, Karamay — which means “black oil” in the Uighur language and where, in 1955, China’s first large oil field was discovered — had the highest per-capita gross domestic product of mainland Chinese cities.

PetroChina’s refinery here is the company’s most profitable one, said Zhen Xinping, a senior engineer. It processes six million tons of oil per year.

Despite the oil boom, this town of 400,000 is modest, and some Uighur neighborhoods are poorer than Han ones. Uighur farmers live in a slum where homes lack indoor toilets. The oil companies employ some Uighurs, but not many.

Many Uighurs say they resent Han rule and the reaping of their homeland’s resources. Ethnic and class tensions can flare here, as they do elsewhere in Xinjiang. A fragmented Uighur insurgency is gaining in intensity across the region, and hundreds of people have died this year in ethnic violence, domestic terrorism and police shootings.

Over the summer, local officials imposed a rule banning people with Islamic dress and long beards from boarding public buses and ordered taxi drivers not to pick them up.

Though the government said it issued the rules in the name of security, many Uighurs see nothing but discrimination.

“It doesn’t matter if they have beards or veils,” said one teenage girl in the Uighur farmers’ shantytown at the edge of Karamay. “They’re not bad people.”

The residents say the government will soon demolish the area. The girl said she would like to stay in the city, though. “Karamay has a lot of oil,” she said, “so I want to work here.”

Correction:

Because of an editing error, a picture caption on Dec. 21 with an article about the oil, gas and coal boom in the Xinjiang region of China, where ethnic Uighurs have long been at odds with the nation’s Han majority, referred incorrectly to the Uighurs who live in Karamay, a city at the center of the region’s oil exploration and production. They are a minority there, not a plurality. (Uighurs do constitute a plurality of residents in the Xinjiang region, which includes Karamay.)

Jonah Kessel contributed reporting, and Mia Li contributed research.

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